India wants to “dramatically” deepen its partnership with the European Union, including by striking defense deals, as the Iran war and global crises push New Delhi closer to Brussels, the country’s foreign minister told POLITICO. In January, the EU inked what’s been described as the “mother of all” trade deals with India during a bilateral summit where Ursula von der Leyen and Antonio Costa, the top two officials in the EU, were welcomed as official state guests during Republic Day celebrations. As that deal snakes its way toward approval in the European Parliament, India sees potential for further upgrading EU-India ties, notably by inking a security of information deal that could pave the way for much closer cooperation on defense armament agreements, per Subrahmanyam Jaishankar. “In my career, I have seen some of our relationships really change, dramatically change. And I am convinced that we are poised at that moment where Europe is concerned,” he said during a visit to Brussels where he attended a gathering of EU foreign ministers. “We are aware of the strategic nature of what we’re doing … This is not just one more trade deal. It’s something much much bigger,” he added. Jaishankar went on to cite potential deals for the EU to procure weapons from India’s armaments industry, including via the purchase of ammunition and drone and counter-drone technology, citing a deal with Airbus to construct in India as an example of deals to come. Such deals should occur within “an enabling environment where Indian companies and European companies have the ability to work with each other without any regulatory or political restriction,” he said, adding that he was “bullish” about prospects for EU-India relations. On trade, Jaishankar said he did not expect the Parliament to get in the way of the EU-India deal. “I think on India, frankly, there is a unity of purpose, and even in the European Parliament the overwhelming sentiment is very much, very much in favor.” Before the EU-India deal was signed, New Delhi had hoped to be exempted from the EU’s Carbon Border Adjustment Mechanism, an exemption that was not granted. Jaishankar said that the two sides would “continue our discussions to see how any issues pertaining to that can be addressed.” GLOBAL MEDIATOR But there’s a dark cloud on the EU-India horizon: Russia. New Delhi has maintained its relations with Moscow, including purchasing its energy exports despite U.S. and EU sanctions on Russian oil. Russian President Vladimir Putin met with Indian Prime Minister Narendra Modi in December of last year, amid other ongoing contacts. The Indian minister — who cited the term “values-based realism” to describe India’s foreign policy outlook — said he expected to hear criticism from some EU counterparts about India-Russia ties during his stay in Brussels, but that this would be outweighed by desire for “mutual de-risking” in a time of turmoil. “I would certainly assume that I will hear views … which will be based on the European Union’s experience of dealing with Russia,” he said. “I think our position has been frankly very balanced and very objective. If you look at how many world leaders from 2022 have been to both Moscow and Kyiv, there are not that many. And my prime minister [Modi] happens to be one of them.” Jaishankar’s visit coincided with growing concerns about the impact of a U.S.-Israeli war against Iran — which the Indian foreign minister described as “deeply concerning.” “We have really enormous stakes there,” he said, referring to Iran. India had “very early on expressed deep concern because … when you see instability, when you [see] conflict in a contiguous area, that has consequences for a lot of people, and if on top of it your trade and energy are impacted, it matters a lot.” While U.S. President Donald Trump is pressing EU countries to help clear the Strait of Hormuz, India has avoided taking any sides. Jaishankar maintains regular contact with his Iranian counterpart, Abbas Araghchi, including a phone call late last week. Another conversation is expected to take place in coming days. Asked what sort of message he was relaying to Tehran, Jaishankar cited “the need to de-escalate,” “concern at the widening of the conflict,” the “energy implications for us,” as well as concern for the roughly 10,000 Indians residing in Iran and millions living across the wider region. “Our hope is that there is a decision made that heads toward an end to the conflict, certainly toward de-escalation, and then an end to the conflict,” he said, adding: “We only see a downside to this conflict.” As for India’s relationship with the United States, Jaishankar — who met with his counterpart, Marco Rubio, on Feb. 3 — steered clear of critical comments on Washington. Asked if he welcomed Trump’s decision to lift sanctions on exports of Russian energy firms Lukoil and Rosneft, he sidestepped, saying: “If you want the global economy to grow, if you want to see stability, predictability in the markets, then let the markets be the focus.” The U.S. and India are negotiating their own trade deal, which has stalled following a ruling by the U.S. Supreme Court against Trump’s tariff policy. Asked if the delay had to do with the U.S. campaign against Iran, he added: “Well, I want to be very clear: what’s happening in the Middle East has nothing to do with that.”

Canadian Prime Minister Mark Carney joined the leaders of Germany and Norway on Friday in criticizing the Trump administration’s decision to temporarily lift sanctions on Russian oil, exposing a public split between Washington and key NATO allies. At a joint press conference in Bardufoss, Norway, where the three leaders were attending the 14-nation NATO exercise Cold Response, Carney, Norwegian Prime Minister Jonas Gahr Støre and German Chancellor Friedrich Merz argued that sanctions relief would weaken efforts to force Russia to negotiate an end to the war in Ukraine. The three NATO leaders were publicly breaking with Washington over the Trump administration’s decision to ease some sanctions on Russian oil. The split came as the U.S. took part in NATO wargaming in Norway’s Arctic region meant to demonstrate allied resolve against Russia as the war in Ukraine enters its fifth year. Merz said he was surprised to wake up Friday to the U.S. decision, “which was obviously taken in D.C. last night.” Echoing Støre, the German leader added: “We should put more pressure on Russia.” Carney aligned Canada with that position. “Entirely agree. Canada’s position is to maintain sanctions on Russia … including on the shadow fleet, which is moving this oil,” the prime minister said, as the three leaders spoke against a backdrop of heavy military armament. “There’s been very tight cooperation between Russia and Iran, at great cost to the people of Ukraine and a great threat to peace and security in Europe. And this group, under the leadership of the two gentlemen to my right, and a broader coalition — Coalition of the Willing — has stood up to that,” Carney added. The U.S. temporarily lifted some of its Russia sanctions late Thursday in an effort to bring down energy prices as the conflict in the Middle East drags on. It would allow the delivery and sale of Russian oil stranded at sea. Ukrainian President Volodymyr Zelenskyy criticized the decision on Friday as “not very logical.” “The lifting of sanctions means that [Russia] will receive more money and there will be more drone attacks” in the Middle East, Zelenskyy said, standing alongside French President Emmanuel Macron in Paris. “Russia will get money for its war machine, and there are a lot of drones that are built on Russian soil to destabilize the Middle East,” he added. In northern Norway, the three leaders were asked whether the U.S. could be “trusted” as a partner on northern security. “Yes,” replied Støre, without hesitation, followed by Carney. Carney went on to describe the close and historic military cooperation between Canada and the U.S. through NORAD, the joint North American air defense command. Støre said security cooperation in the Arctic was in the U.S’ domestic self-interest, calling it a “net positive for the security of the United States.” But when pressed on whether the decision by the U.S. to ease Russian oil sanctions changes that, the Norwegian leader gave a blunt reply. “We have made it clear that we disagree with that decision. And, you know, disagreements appear among countries. Let’s be honest about that,” Støre said.

Andrew Puzder is U.S. Ambassador to the EU and Matthew Whitaker is U.S. Ambassador to NATO. The NATO transatlantic alliance has been the foundation of European and American security for decades. Today, as the world faces complex and unprecedented security challenges, the United States and Europe must work together to sustain and strengthen this partnership. Limiting U.S. defense industry participation in European procurement programs threatens that partnership and weakens our mutual security. To their credit, NATO allies have responded to President Donald Trump’s call for increased defense investment, with commitments to raise defense spending to 5 percent of GDP. But for the most part those commitments are as yet unfulfilled, meaning the U.S. still bears a disproportionate share of Europe’s security costs and provides technical and defense production capabilities our NATO allies lack. As the war in Ukraine rages on, U.S. production lines must operate at capacity to supply munitions other nations cannot, such as U.S. air defense systems and their interceptor missiles and F-16 ammunition and spare parts. This is particularly true as the U.S. strives to meet its own defense production needs as well as those of our allies across the world. For the U.S. to continue supplying the armaments Ukraine and NATO member countries need requires orders sufficient to justify their production and the resources to pay for them. With that in mind, the United States has expressed concerns about how EU defense initiatives like Security Action for Europe (SAFE) and the European Defense Industry Program (EDIP) restrict market access for American companies. Such exclusionary measures undermine our collective defense by limiting competition, stifling innovation and depriving these companies of the orders they need to maintain production at the levels required to meet our allies’ needs. EDIP and SAFE mandate the EU maintain control over the design, configuration, and future modification of defense systems. And these requirements threaten intellectual property rights, constrain supply chains, and impede transatlantic interoperability. Additionally, these programs impose a 35 percent cap on U.S. industrial participation, limiting the possibility of U.S.-EU joint defense ventures. EU policymakers considering the future of defense cooperation face a clear choice. | Armend Nimani/AFP via Getty Images Looking ahead, we are especially concerned about the Commission’s plan to incorporate “European preference” in the Defense Procurement Directive in 2026. Revisions to the Directive are critical because they will directly impact how EU countries spend their national money on defense procurements. Our view is that EU countries should have the full sovereign autonomy to make decisions about defense procurements — including where to make purchases — without the EU imposing additional eligibility criteria similar to those present in SAFE and EDIP. Similarly, if the goal of the European Commission’s proposed €90 billion loan to Ukraine is for Ukraine to defeat Russia, the EU should allow Ukraine to purchase what it needs as quickly as possible. Otherwise, the loan appears to serve more as an economic development initiative that favors certain EU countries’ defense industries. Let us be clear: We welcome member countries’ efforts to ramp up their defense budgets and the EU utilizing financial levers to encourage more defense spending. But not at the cost of decades of cooperation by fragmenting the defense market and reducing the effectiveness of joint efforts. The economic implications are significant. U.S. defense companies are not merely suppliers; they’re partners who have invested in European economies, created tens of thousands of good-paying European jobs, and provided the advanced technology that strengthens NATO. Our transatlantic defense industry is most effective when nations are free from protectionist policies and able to choose equipment and capabilities best suited to their needs. Joint ventures and transatlantic supply chains have enabled collaboration on next-generation technologies including missile and cyber defense. By leveraging the expertise and resources of American industry, Europe can share the burden of defense investment and ensure access to the best possible equipment. The U.S. has consistently welcomed European investment and competition in our own defense market, including through Reciprocal Defense Procurement Agreements (RDPAs) with 19 of 27 EU countries. Reciprocal openness is essential to maintain trust and ensure both sides benefit from shared investments. Restrictive measures stand in direct contrast to member countries’ commitments under these agreements and undermine access to our long shared, transatlantic defense industrial base. The stakes are high. A prosperous, secure Europe is in the best interests of both the EU and the United States. European defense capability strengthens NATO and enables both sides to meet global challenges more effectively.  Creating barriers for U.S. industry will slow Europe’s rearming efforts and undermine both NATO readiness and interoperability by severing access to integrated transatlantic supply chains. EU policymakers considering the future of defense cooperation face a clear choice — pursue policies that restrict market access and fragment the defense sector, or foster an environment of openness, competition, and innovation. The latter approach supports our collective security, readiness, resilience, and cost-effective investment, benefiting taxpayers, workers, and service members on both sides of the Atlantic.

Switzerland will raise its value-added tax rate for a decade to boost defense spending, its government announced today. “In view of the deteriorating geopolitical situation, the Federal Council wants to substantially strengthen Switzerland’s security and defense capabilities,” the statement reads. “To this end, additional resources in the order of 31 billion Swiss francs [€33 billion] are required.” The Council plans to temporarily raise VAT by 0.8 percent from the current 8.1 percent for 10 years, as of 2028. The additional revenues will be allocated to an armament fund that will also have borrowing capacity. However, raising the VAT requires a change in the constitution and a public consultation will open in the spring. Switzerland has been rethinking its defense stance since Russia’s attack on Ukraine almost four years ago. It is looking for more military cooperation with European nations and ramping up its rearmament, although it still has no intention of joining NATO. Switzerland spends about 0.7 percent of its GDP on defense, one of the lowest rates in Europe. The current goal of boosting that to 1 percent by 2032 is now out of date, the Federal Council said. “Due to the savings made in recent decades, the armed forces are also insufficiently equipped, particularly to effectively repel the most likely threats, namely long-range attacks and hybrid conflicts,” the statement added. Priorities for the country’s armament push include short- and medium-range air defense systems, cybersecurity and electromagnetic capabilities.

The killing of Alex Pretti by federal immigration agents in Minnesota has led to a rare rebuke of top Trump administration officials by leading 2nd Amendment advocates. Multiple national gun-rights organizations, as well as a prominent Minnesota gun rights group, have expressed horror at top Trump administration officials’ criticism of Pretti for being armed with a handgun that he had a legal permit to carry. “The FBI director needs to brush off that thing called the Constitution, because he clearly hasn’t read it,” National Association for Gun Rights President Dudley Brown told POLITICO. “I know of no more crucial place to carry a firearm for self defense than a protest.” FBI Director Kash Patel said Sunday on Fox News that “You cannot bring a firearm, loaded, with multiple magazines to any sort of protest that you want. It’s that simple. You don’t have a right to break the law.” DHS Secretary Kristi Noem said Saturday that she didn’t “know of any peaceful protester that shows up with a gun and ammunition rather than a sign.” White House press secretary Karoline Leavitt said Monday that “any gun owner knows” that carrying a gun raises “the assumption of risk and the risk of force being used against you,” during interactions with law enforcement. Gun-rights groups rushed to push back on an administration that was breaking with conservative orthodoxy on the right to bear arms in public places. Several were particularly outraged by Bill Essayli, the acting U.S. attorney for the Central District of California, who posted on X: “If you approach law enforcement with a gun, there is a high likelihood they will be legally justified in shooting you.” The National Rifle Association, a longtime ally of President Donald Trump, posted that Essayli’s remarks were “dangerous and wrong,” and called for a full investigation rather than “making generalizations and demonizing law-abiding citizens.” Aidan Johnston, the director of federal affairs for Gun Owners of America, called Essayli’s remarks “absolutely unacceptable.” “Federal prosecutors should know better than to comment on a situation when he didn’t know all the facts, to make a judgment in a case like this, and then also, just to make a blanket statement, threatening gun owners in that way,” Johnston said Monday. It’s not the first time Trump and the gun lobby have tangled since he returned to office. In September, gun rights advocates were shocked by reports that the administration was looking into a gun ban for transgender Americans. During Trump’s first term, his administration issued a regulation to ban bump stocks, but the Supreme Court ultimately blocked the rule in 2024. There are still conflicting accounts surrounding Saturday’s shooting — including whether Pretti’s hand at any point during the incident was near his gun. Video verified and analyzed by several media outlets, including the New York Times, show the item Pretti appeared to be holding was a phone he was using to film the scene before he attempted to help a woman who had been pushed to the ground by Border Patrol agents. According to a Washington Post analysis of video footage, federal agents appear to have secured Pretti’s gun moments before an agent shot the 37-year-old ICU nurse, who was also a U.S. citizen. “We can all see what is on video,” said Minnesota Gun Owners Caucus chair Bryan Strawser, arguing statements from Trump’s officials have not lined up with footage of the event. Strawser hoped the incident would help Democrats understand the importance of gun ownership. “If it has helped move the needle and helped individual folks realize that they should be protecting this right, I think that’s a good thing,” he said. “I think the more political-minded part of my brain would say, ‘are they just using this for their own political purposes and this isn’t going to change their position at all?’ I think time will tell as to where that goes.” California Democratic Gov. Gavin Newsom — who became a gun owner last year — responded on X to Noem’s remarks: “The Trump administration does not believe in the 2nd Amendment. Good to know.” Rep. Dave Min (D-Calif.) and former Rep. Mary Peltola (D-Alaska) also used the moment to highlight the right to carry. “Joining the gun lobby to condemn Bill Essayli was not on my bingo card but here we are,” Min said on X. “Lawfully carrying a firearm is not grounds for being killed.” Brown argued it was Newsom and Democrats who were being hypocritical, pointing to Newsom’s longtime support for more gun control. “The irony is thick,” he said. Jacob Wendler contributed to this report.

BRUSSELS — The European Commission on Wednesday unveiled a €90 billion loan to Ukraine aimed at saving it from financial collapse as it continues to battle Russia while aid from the U.S. dries up. About one-third of the cash will be used for normal budget expenditures and the rest will go to defense — although countries still need to formally agree to what extent Ukraine can use the money to buy weapons from outside the EU. A Commission proposal gives EU defense firms preferential treatment but allows Ukraine to buy foreign weapons if they aren’t immediately available in Europe. While the loan is interest-free for Ukraine, it is forecast to cost EU taxpayers between €3 billion and €4 billion a year in borrowing costs from 2028. The EU had to resort to the loan after an earlier effort to use sanctioned Russian frozen assets ran into opposition from Belgium. The race is now on for EU lawmakers to agree on a final legal text that’ll pave the way for disbursements in April, when Ukraine’s war chest runs out. Meetings between EU treasury and defense officials are already planned for Friday. The European Parliament could fast-track the loan as early as next week. The financing package is also crucial for unlocking additional loans to Ukraine from the International Monetary Fund. The Washington-based Fund wants to ensure Kyiv’s finances aren’t overstretched, as the war enters its fifth year next month. The €90 billion will be paid out over the next two years, as Moscow shows no sign of slowing down its offensive on Ukraine despite U.S.-led efforts to agree on a ceasefire. “Russia shows no sign of abating, no sign of remorse, no sign of seeking peace,” Commission President Ursula von der Leyen told reporters after presenting the proposal. “We all want peace for Ukraine, and for that, Ukraine must be in a position of strength.” When EU leaders agreed on the loan, Ukrainian President Volodymyr Zelenskyy called the deal an “unprecedented decision, and it will also have an impact on the peace negotiations.” Adding to the pressure on the EU, the U.S. under President Donald Trump has halted new military and financial aid to Ukraine, leaving it up to Europe to ensure Kyiv can continue fighting. Once the legal text is agreed, the EU will raise joint debt to finance the initiative, although the governments in the Czech Republic, Hungary and Slovakia said they will not participate in the funding drive.  The conditions on military spending are splitting EU countries. Paris is demanding strict rules to prevent money from flowing to U.S. weapons manufacturers, while Germany and other Northern European countries want to give Ukraine greater flexibility on how to spend the cash, pointing out that some key systems needed by Ukraine aren’t manufactured in Europe. MEETING HALFWAY The Commission has put forward a compromise proposal — seen by POLITICO. It gives preferential treatment to defense companies based in the EU, Ukraine and neighboring countries, including Norway, Iceland and Liechtenstein, but doesn’t rule out purchases from abroad. To keep the Northern European capitals happy, the Commission’s proposal allows Ukraine to buy specialized weapons produced outside the EU if they are vital for Kyiv’s defense against Russian forces. These include the U.S. Patriot long-range missile and air defense systems. The rules could be bent further in cases “where there is an urgent need for a given defense product” that can’t be delivered quickly from within Europe. Weapons aren’t considered European if more than 35 percent of their parts come from outside the continent, according to the draft. That’s in line with previous EU defense-financing initiatives, such as the €150 billion SAFE loans-for-weapons program. Two other legal texts are included in the legislative package. One proposes using the upper borrowing limit in the current budget to guarantee the loan. The other is designed to tweak the Ukraine Facility, a 2023 initiative that governs the bloc’s long-term financial support to Kyiv. The Commission will also create a new money pot to cover the borrowing costs before the new EU budget enters into force in 2028. RUSSIAN COLLATERAL Ukraine only has to repay the €90 billion loan if it receives post-war reparations from Russia — an unlikely scenario. If this doesn’t happen, the EU has left the door open to tapping frozen Russian state assets across the bloc to pay itself back. Belgium’s steadfast opposition to leveraging the frozen assets, most of which are based in the Brussels-based financial depository Euroclear, promises to make that negotiation difficult. However, the Commission can indefinitely roll over its debt by issuing eurobonds until it finds the necessary means to pay off the loan. The goal is to ensure Ukraine isn’t left holding the bill. “The Union reserves its right to use the cash balances from immobilized Russian assets held in the EU to repay the Ukraine Support Loan,” Economy Commissioner Valdis Dombrovskis said alongside von der Leyen. “Supporting Ukraine is a litmus test for Europe. The outcome of Russia’s brutal war of aggression against Ukraine will determine Europe’s future.” Jacopo Barigazzi contributed to this report from Brussels.

Russia has no veto over Kyiv’s bid to join NATO, alliance chief Mark Rutte said on Wednesday — rebuffing a peace deal proposal floated by Moscow and Washington that would block Ukraine from the alliance. “Russia has neither a vote nor a veto over who can be a member of NATO,” Rutte said in an interview with El País and German outlet RND. The alliance’s founding Washington Treaty “allows any country in the Euro-Atlantic area to join,” he added. Rutte’s comments follow a U.S.-led proposal to end Russia’s full-scale war, leaked last week, which included the provision that NATO agree “it will not accept Ukraine at any moment in the future.” The 28-point plan has since been modified into a 19-point one that waters down some of its most pro-Russian elements. An alternative European proposal scraps the idea of excluding Ukraine from NATO. Rutte took some of the sting out of his comment by insisting that he has positive feelings for U.S. President Donald Trump. “I like the guy,” he said. NATO allies have balked at issuing an immediate invitation for Ukraine to join the organization, but members last year agreed that Kyiv’s bid was “irreversible” — a statement Rutte has repeated since despite opposition to the country’s accession by Trump and other member countries. The NATO secretary-general acknowledged that several “allies … currently oppose Ukraine’s accession.” Rutte said the current peace plan, which came after broader diplomatic talks in Geneva on Sunday, provided a “good foundation for further discussions,” but added that any proposal will require a “separate, parallel discussion” with NATO “on certain issues.” European Commission President Ursula von der Leyen said on Wednesday that any decision about Ukraine’s bid to join the EU or the alliance should not be made unilaterally. “Nothing about Europe without Europe, nothing about NATO without NATO,” she told European Parliament lawmakers. Rutte also said the alliance would deliver a total of $5 billion in weapons to Ukraine as part of a NATO-led scheme that has European allies buying U.S. arms for Kyiv “by the end of this year.” Eleven countries have so far contributed to five $500 million packages as part of the so-called PURL program, with a sixth package expected in the coming days. The remaining money will come from a mixture of future packages and off-cycle payments, according to a person familiar with the matter, who was granted anonymity to speak freely on the sensitive topic. Rutte warned that Moscow will not stop jeopardizing Europe’s security even if it agrees to a peace deal. “Russia will continue to be a long-term threat for a long time,” he said.

LONDON — In the corridors of Whitehall, armies of officials are working out how best to spend billions of pounds earmarked for defense equipment. However, they have yet to inform the people it concerns the most: Britain’s arms industry. Many in the sector now fear that they’ve wasted their own money developing cutting-edge gear, as the government drags its feet on awarding contracts. U.K. Prime Minister Keir Starmer’s Labour Party has made a lot of noise on defense since entering government last year, plundering the aid budget to get defense spending to reach 2.6 percent of GDP by 2027 and a promise of 3.5 percent by 2035.  Alongside the funding boost, Starmer asked George Robertson, a Labour Party politician who is a former NATO secretary-general, to lead a major inquiry into how the U.K. would meet geopolitical threats, known as the Strategic Defence Review (SDR). The SDR was well received across the defense industry and viewed as a statement of intent from the government to devote effort and resources to building up the sector, with an emphasis on resilience and innovation.  Those good intentions were supposed to be followed by a series of complementary announcements — including a defense industrial strategy, the appointment of a new national armaments director, and a defense investment plan.  The industrial strategy and armaments director both arrived late, while the defense investment plan is still missing in action. It is now expected after this week’s fall budget.  Six months since the SDR, many in the industry complain that they haven’t received the certainty they need about where the British government — in many cases, their sole buyer —plans to invest.  Business owners say this is limiting their ability to make long-term plans and risks skilled workers departing for other jobs.  One representative of a mid-sized arms manufacturer — granted anonymity like others in this piece in order not to damage commercial prospects — said the problem was that the “big, bold” prescription of the SDR has given way to “repeated deferral, which always happens with delivery plans of this complexity.” INNOVATING IN THE DARK The war in Ukraine has radically reshaped other countries’ understanding of what’s needed on the battlefield, and the SDR set out a clear expectation that innovation would be rewarded. At September’s DSEI — an industry jamboree held in London — it was plain to see that private companies had stepped up to deliver prototypes for novel weaponry and other equipment, from modular robots that can deliver materiel to a battlefield and can also serve as stretchers, to AI that can read and predict threats on the ground in real time.  Defence Minister Luke Pollard said:  “We need to move to war-fighting readiness, and the SDR gave industry a very clear direction of how an increasing defense budget will be spent on new technologies and looking after our people better.” | John Keeble/Getty Images Much of that research and development was done by companies drawing on their own budgets or taking out loans as they wait for news of any specific government contracts.  For small suppliers in particular, the lag could prove existential.  One small manufacturer based in England said: “We are ready to go; we have built factories that could start making equipment tomorrow. But we can’t until an order is placed.” Armored vehicle maker Supacat has said that while its business is stable, suppliers will suffer without a predictable path ahead. “This is about the wider industry and our partners in the supply chain that have been contributing,” Toby Cox, the company’s head of sales, told POLITICO. “Our assumption is we don’t get more [orders], some of these companies will have a downturn in their orders.” KEEPING PRODUCTION LINES WARM Andrew Kinniburgh, defense director general of manufacturers association Make UK, echoed those concerns. While the industry “warmly welcomed” the Defence Ministry’s commitment to boost SME spending, he said, “the MOD must give companies certainty of long-term demand signals and purchase orders, allowing businesses to make the private investments needed in people, capital, and infrastructure.” Mike Armstrong, U.K. managing director of German defense firm Stark, which has recently opened a plant in Britain, added: “Giving the industry a clear view of future requirements is the fastest way to ensure the U.K. and its allies stay ahead.” Even some bigger companies that deal with the government on components for aircraft and submarines have privately complained about putting money into research and development without knowing what the end result will be.  An engineer working at one of Britain’s largest defense firms said: “We have multi-use items that could be for both military and civilian purposes, but cannot invest until we know what government strategy is. If it’s bad for us, it must be so hard for SMEs.” Mike Armstrong, U.K. managing director of German defense firm Stark, added: “Giving the industry a clear view of future requirements is the fastest way to ensure the U.K. and its allies stay ahead.” | Andrew Matthews/Getty Images The issue is not only one of investment, but also of skills. Supacat’s Cox said that keeping production lines warm matters because the workforce behind complex fabrications is fragile. “The U.K. has a skill shortage, particularly around engineering fabrication. If we’ve got an employee in that sector, we absolutely don’t want to lose them in another sector,” he said.  NOT LONG TO GO The Ministry of Defence said it appreciates the need for clarity. Defence Minister Luke Pollard, speaking to POLITICO at DSEI, said:  “We need to move to war-fighting readiness, and the SDR gave industry a very clear direction of how an increasing defense budget will be spent on new technologies and looking after our people better.” He argued there was “a neat synergy” between the “duty of government to keep the country safe and the first mission of this Labour government to grow the economy.” An MOD spokesperson said the defense investment plan would “offer clear, long-term capability requirements that enable industry to plan and unlocking private investment.” They pointed out that £250 million had already been allocated for “defense growth deals” alongside a £182 million skills package, and that the MOD had placed £31.7 billion in orders with U.K. industry in the last financial year. A government official rejected claims that ministers were moving too slowly, pointing to Defence Secretary John Healey’s recent announcement on new munitions factories as exactly the kind of demand signal that industry is looking for.  The director of a large U.K. defense producer said the signs from the government were “encouraging,” specifying that Chancellor Rachel Reeves, having agreed to more money for defense, “wants to see a return on investment.” While most of the country will be braced for Reeves’s big moment on Wednesday when she announces the national budget, one sector will have to hold its breath a little longer. Luke McGee contributed to this report.

The Central Bank of the Russia Federation lowered its key interest rate today and slashed its growth forecast for 2025 as the country’s economy is battered by a combination of high inflation and wide-ranging Western sanctions. The move comes after the U.S. imposed sanctions on two of its major oil suppliers, Rosneft and Lukoil. Oil and gas account for around a fifth of Russia’s gross domestic product (GDP). The bank updated its outlook, forecasting that the economy would grow by between 0.5 to 1 percent in 2025, down from 1 to 2 percent earlier. It also lowered its key interest rate by 0.5 percentage points, to 16.5 percent, despite forecasting an uptick in inflation next year, to between 4 to 5 percent. It’s unusual for a central bank to lower its policy rate while revising its inflation outlook upward, since lower rates are usually linked to higher inflation, and central banks are tasked with maintaining price stability. However, the combination of managing escalating foreign sanctions on the economy, together with the need to maintain a high level of industrial output to produce the armaments necessary to prolong its war on Ukraine, has put the bank’s governor, Elvira Nabiullina, in a tough spot. Ukraine’s ongoing drone campaign aimed at crippling Russia’s oil refineries has heaped further pressure on the country’s economic output. On Thursday, Herman Gref, who heads Russia’s largest lender Sberbank, said that it had been a mistake to focus too much on inflation at the expense of economic growth. In its statement, the central bank said that it sees inflationary pressures increasing in the medium term, as tax hikes, trade disruption and fluctuations in the oil price all bite. “Geopolitical tensions remain a significant uncertainty factor,” it said.

Serbian President Aleksandar Vučić has accused Turkey of violating international laws and destabilizing the Western Balkans by supplying weapons to Kosovo. “I am horrified by Turkey’s behavior and the brutal violation of the U.N. Charter and U.N. Security Council Resolution 1244, as well as the continued arming of the Pristina authorities,” Vučić said in a social media post Wednesday, referring to the capital of Kosovo. “It is now completely clear that Turkey does not want stability in the Western Balkans and is once again dreaming of restoring the Ottoman Empire. Serbia is a small country, but we have clearly understood the message!” he added. While a 1998 U.N. Security Council resolution does proscribe the sale or supply of weapons to Kosovo, an agreement from the following year, U.N. Security Council Resolution 1244, states that this prohibition “shall not apply to arms and related matériel for the use of the international civil and security presences.” Belgrade and Ankara have maintained complex relations, balancing economic cooperation with deep historical and political tensions. Turkey remains one of Kosovo’s strongest allies and was among the first countries to recognize its 2008 declaration of independence from Serbia. Vučić’s comments follow earlier accusations against Albania and Croatia of fueling an “arms race” in the region following the signing of a joint declaration on defense cooperation with Kosovo in March. The latest accusations come amid heightened tensions in northern Kosovo, where sporadic clashes between Serb communities and Kosovo’s security forces in recent years have reignited concerns over regional security. Ankara has not yet officially responded to Vučić’s remarks, but Turkish officials have previously defended their military cooperation with Pristina as part of efforts to strengthen regional defense capacities. In January 2024, Turkish Defense Minister Yaşar Güler and his Kosovar counterpart Ejup Maqedonci signed a military framework agreement in Ankara, expanding cooperation on arms sales, joint exercises and training programs.